European equity markets extended gains on Friday, tracking the upside momentum in Wall Street and Asia markets, due to fresh optimism after Federal Reserve chairman designate Janet Yellen defended the permanence of the QE programme for the short-term. CAC, DAX and London posted solid gains between 0.2% and 0.4%, while the euro gained further toward 1.35 area against the US dollar.
On the macroeconomic front, the US economic figures were fairly disappointing, adding pressure to the dollar as the USD index retreated toward 80.5 area. NY Fed manufacturing fell to -2.21 in November, while industrial production declined by 0.1% in October and capacity utilisation was reported at 78.1%, both missing expectations.
In London, heavy-weighed energy stocks added the most points to the market. Royal Dutch Shell surged by 2.1% and Tullow Oil climbed 1.13% higher. In addition, mining stocks also ended higher with Fresnillo, Anglo American, Antofagasta and BHP Billiton gaining between 1.12% and 3.17%.
It has been a fairly volatile week with tentative trading conditions due to the FOMC statement on Wednesday. Investors will try to digest the optimistic news about the QE programme, while Monday brings US housing data with the NAHB housing market index. After all, the US dollar has rebounded from recent lower, holding above the 80.0 area.